Japan’s Government Pension Investment Fund has been blocked from investing directly in equities amid corporate fears that the $1.1tn state monolith could wield too great an influence over the private sector. The decision, reached on Wednesday by an

“Critics of the world’s biggest sovereign pension fund say that, despite clear pressure from the government of prime minister Shinzo Abe, the GPIF has failed to publicly embrace one of the key “arrows” of the Abenomics growth programme — across-the-board improvements in corporate governance.

Nicholas Benes, a Tokyo-based expert on the issue, said that mention of Japan’s corporate governance code, which came into force in June 2015, was “conspicuously absent” from any of the GPIF’s investment policy documents.

Last year, a position paper by the American Chamber of Commerce in Japan indicated that because of the size and scope of the GPIF’s investments relative to other pension funds, the GPIF was “even more vulnerable to the potential loss of value and diminution of investment returns that can arise from poor corporate governance at an investee company”. ”